Editorial: PUC needs to put consumers first

Twentieth century Houston rose to prominence on a blast of air conditioning, and the 21st century city is no less dependent on computers, phones and late-night office lights. So we clearly need to avert the rolling blackouts that plagued Texas last year. But the Public Utility Commission first should figure out how much it will cost consumers.

The PUC, the state agency that monitors electricity sales, will vote tomorrow on a plan to raise Texas' generating capacity. We do need more power: Supply hasn't kept up with demand, and state electricity reserves are expected to fall below 10 percent in the next two years. The catch: The PUC wants to raise generation by lifting the price cap of wholesale energy.

The lure of higher earnings may attract investors. But what's guaranteed is that higher wholesale prices will raise retail prices. Consumers - both residential and business - will be fueling this business plan by paying higher retail costs.

That's not necessarily an unreasonable trade-off. What makes the decision murky, however, is the risk the PUC is willing to take to attract investors without even formally analyzing the dollar figure that Texans will pay for this gambit.

Meanwhile, Texas Industrial Energy Consumers, a business organization, has crunched the numbers - and called them "staggering." The proposal before the PUC would raise the wholesale cap by 50 percent this summer. The commission could vote to double it again during a later proceeding.

Applying just the 50 percent increase to the energy-use patterns of last year equals as much as $4.7 billion in additional costs, according to the group.

While raising the wholesale cap will definitely affect consumers in the long run, there's less certainty about its effect on investors. The Massachusetts-based Brattle Group, tasked with studying why investors were avoiding Texas electricity plants, found that the slim profit margins were indeed keeping them away.

On the other hand, raising that cap may or may not draw them in - and it likely will not eliminate future power outages. In fact, the consultants wrote, even with the new pricing structure, Texans should expect "approximately one load-shed event per year with an expected duration of two and a half hours, and thirteen such events in a year with a heat wave as severe as the one in 2011."

As the Chronicle's Loren Steffy warned in a column last week ("A summer of darkness looms under deregulation," Page D1, June 20), we could end up with electricity that's neither cheap nor reliable.

Skyrocketing prices may be the price Texas consumers must pay for even somewhat more reliable electricity access. But at best, it's a difficult equation. The PUC owes it to the public to slow down, put the numbers on paper and share them before throwing the switch on this proposal.